Columnist

FREE PREMIUM ARTICLE: How businesses can improve marketing effectiveness

The retail sector is leading the way in marketing effectiveness. Ian Gibbs, Director of Insight at the Data & Marketing Association (DMA UK), reveals how they did it.

Trading conditions have been undeniably tough during the cost-of-living crisis: consumer demand has been impacted by squeezed household budgets, while profit margins have been hit by cost inflation.

Inflation may have now dropped below 5%, yet the economic outlook for 2024 remains particularly muted in the face of continued geopolitical uncertainty.

It is against this challenging backdrop that marketers are attempting to do more with less. With their marketing budgets under more pressure than ever, there is an even greater focus on hitting short-term targets using promotional activity and discounting.

It is for this very reason that the DMA asked marketers in its “How to Win Back Customers and (re)Build Loyalty” report whether they have a cost-of-living crisis exit strategy in place – i.e. a strategy for reducing the heightened levels of price sensitivity and consumer promiscuity created by an over-dependency on deals and offers.

Creating the right balance in marketing

The retail sector answered that question with a resounding “yes” last year, as revealed in the Retail Marketing Effectiveness 2023 report, created by the DMA in partnership with Sagacity. After retail marketing effectiveness experienced a significant course correction decline in 2021 following the effectiveness highs seen during the pandemic, there was a return to strong growth in 2022.

The report found that while the overall cross-sector picture of marketing effectiveness has remained muted in the past year, retail marketers have bucked the trend by recording one of the most successful years in marketing effectiveness in the last half decade.

A balanced approach to campaign strategy very much sat at the heart of this trend, with retailers driving short-term response through promotions and discounts, while keeping one eye on the long-term by also investing in brand building activity (e.g., brand awareness and trust).

Retailers have got the equilibrium right in terms of campaign strategy. There is an even split between acquisition and retention activity, and the most even balance between brand and response activity seen in the last six years, with a third of campaigns having some sort of brand goal.

This approach has resulted in growth across the board in terms of brand (where the number of effects has more than doubled year on year), response (61% growth in effects), and business effects (67% growth).

How to keep marketing effective

The confluence of data, creativity, and technology has been used to maximise retail marketing effectiveness. Data- and technology-driven campaigns have proven themselves to be particularly adept at boosting response campaign effectiveness, while highly creative campaigns find their strengths in boosting the number of brand effects per campaign.

Retail marketers proved themselves adepts at hitting performance marketing KPIs related to sales, average order value improvements, and a more-than-tripling of online sales effects over the last six years.

However, it is in the brand building space where retail advertisers are showing particular foresight. Brand investment is the key to stimulating future demand, while reducing price sensitivity and creating stickier, more loyal customers.

FMCG brands that obviously rely on the retail channel to reach their customers provide best practice examples of how to successfully build brands. Recent DMA Award winners such as Unilever for Dove and Sure, and Mondelez for Oreo, are examples of how brands have created emotional connections with consumers to stay top of mind, while shifting the dial on how people think and feel about their products.

It is in the brand building space that the power of creativity is most apparent. When assessing the top 25% of retail campaigns based on DMA Award judges’ rating of their creativity, there is a clear brand multiplier at play. Highly creative retail campaigns tend to drive five times the number of brand effects vs the bottom 25%.

Creativity and data are key

Creativity and data insights matter when it comes to building emotional engagement between consumers and brands. They will be vital in helping businesses plot their cost-of-living crisis exit strategy as they look to win back customers and rebuild loyalty.

Businesses are facing some of their biggest challenges in decades, but there are useful strategies that their marketing personnel can adopt to drive business performance during these difficult times.

This was posted in Bdaily's Members' News section by The Data & Marketing Association .